Which of the following could decrease outstanding capital stock?
Answer(s): E
Only the purchase of treasury stock would cause a firm's capital stock account to decrease because the firm acquires outstanding shares and immediately retires these shares.
Which of the following is/are not extraordinary items?
Answer(s): B
Gains from disposal of a business segment are part of "Discontinued Operations," not extraordinary items.They appear segregated from the income from continuing operations as well as extraordinary items and are reported net of tax effects. Inventory write-downs and other such asset revaluations are considered unusual but not extraordinary items. These appear as part of income from continuing operations.
A liability can be recognized when
Answer(s): D
The amount or the creditor need not be certain and some future payments such as wages to be paid in the future may not be reported as liabilities.
Over a given year, a firm's total assets increased by $8,000 and total liabilities decreased by $6,000. If the firm did not issue any new equity and paid out $1,800 in dividends, then its net income during the year was ________.
Total assets - Total liabilities = Equity. Hence,Change in Assets - Change in Liabilities = Change in Equity.Thus, change in equity = 8,000-(-6,000) = $14,000 All of the net income not paid out as dividends goes into increasing the equity. Since no new shares were issued, Net Income = change in equity + dividends paid. This gives net income = $14,000 + $1,800 = $15,800.
The reason that the translation of foreign subsidiaries will generate discrepancies between the changes in accounts reported on the balance sheet and those reported in the cash flow statement is
Thus, cash flow from operations does not include the effects of the translation process.
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